Dhaka: Bangladesh Bank (BB) has maintained its tight monetary policy stance for the first half of the fiscal year 2025-26 (H1FY26) to contain inflation and anchor inflation expectations.
According to Bangladesh Sangbad Sangstha, BB Governor Dr. Ahsan H Mansur announced the monetary policy for the first half of FY26 during a press conference at the central bank headquarters. The governor emphasized that the primary goals of this monetary policy statement (MPS) are to further decelerate inflation while maintaining exchange rate stability and strengthening financial stability.
Dr. Mansur highlighted concerns over global economic growth due to increased trade tensions and policy uncertainty. He noted the potential risks to exports posed by recent tariff increases by the U.S. administration, which could disrupt global supply chains and intensify financial market turbulence. Despite these challenges, global inflation is expected to ease due to weakening demand, currency volatility, and declining hydrocarbon prices, he added.
The BB governor outlined the bank's plans to continuously monitor inflation trends and the liquidity situation in the domestic market. He assured that if current projections consistently show a decline in inflation and the policy rate in real terms reaches 3.0 percent, BB will gradually begin to lower the policy rate. He also mentioned that BB would adjust the policy rate to address short-term impacts if exports weaken due to tariff shocks and the weaker global growth outlook.
Dr. Mansur acknowledged the significant macroeconomic challenges faced by the economy since the current interim government assumed office in August 2024. Persistently high inflation, a depreciating exchange rate, depleting foreign exchange reserves, a buildup of external payment arrears, tight liquidity conditions, lack of good governance, and elevated non-performing loans (NPLs) were among the major challenges identified.
In response to these challenges, BB has maintained a tight monetary policy stance and adopted a fully flexible market-based exchange rate regime. Dr. Mansur reported that headline inflation has gradually eased due to coordinated demand and supply-side measures. The central bank's initiatives towards implementing a fully flexible exchange rate regime have also contributed to rebuilding foreign exchange reserves.
Moreover, Dr. Mansur stated that accountability and good governance in the banking sector are gradually being restored, depositor confidence has improved, and the liquidity situation has eased. He reiterated BB's alignment with the government's budgetary targets of achieving 5.5 percent GDP growth and containing inflation within the 6.5 percent ceiling for FY26.
Regarding the exchange rate, Dr. Mansur noted the move towards a more flexible exchange rate regime in May 2025 to enhance stability in the foreign exchange market. BB's commitment to maintaining a flexible exchange rate regime aims to ensure stability and build up foreign reserves, thereby mitigating external shocks.
To address rising non-performing loans, BB has launched significant reform initiatives to ensure long-term economic stability. Dr. Mansur emphasized that effective implementation of ongoing initiatives, coupled with forthcoming measures, will position BB to restore good governance practices and bolster stakeholder confidence in the banking system. BB plans to roll out risk-based supervision (RBS) of banks from January 2026 to usher in qualitative changes in how banks are monitored and regulated.